I was the youngest editor in the Observer’s history and not an obvious choice, but Kushner liked me because I had been the founding editor of Gawker, which had grown into one of the largest indie media companies in the country, with more than 100 million unique visitors a month, and because I had an entrepreneurial and digital background. I also had started a Wall Street site he’d considered acquiring, and I was the only candidate he interviewed who asked to see the Observer’s financials before I would take the job.
But I resigned in 2012 for a variety of reasons, chiefly that the president of the company and I couldn’t persuade Kushner to recapitalize the Observer — even though I reached all my numbers. When the paper had a profitable quarter for what I was told was the first time, Kushner floated the idea of layoffs to increase the margins, seemingly ignoring the fact that staff reductions would also reduce ad inventory by reducing content. A material part of what had been attractive about the job was the promise of expansion and growth. But we submitted business plans over and over again, and Kushner rejected them. He wanted the Observer to be cheaper to run, usually at the expense of growth and evolution, and he could not see the relationship between scale and profit — between risk and reward. (The White House did not answer a request from The Washington Post to provide Kushner’s perspective for this story.)
He viewed investments in terms of opportunity costs. “Why should I put more money into the Observer when I could invest in a software company?” he would say. This is a legitimate question for any returns-driven investor. But news media doesn’t scale like software. You need people to produce content, at least until artificial intelligence becomes more sophisticated and sensitive sources are willing to trust a bot.
Why would you buy a newspaper if you expect it to scale the way software does? Why assume that media and software have the same risk profile and dynamics? Kushner would frequently point to a media company with a 60-person editorial staff and ask why our two-person desk wasn’t producing as many stories or as much traffic. Or he’d argue, bizarrely and incorrectly, that because Gawker started with one person, that meant you didn’t need head count to scale a media company. The Internet makes media more scalable, of course — distribution is unlimited and gained at little marginal cost. But that doesn’t mean a media company is just like Uber.
That same obsession with the tech world permeates Kushner’s new project. Cost-cutting is important in situations where there is excess, but it is not what catalyzes evolution; if the point here is to make government more effective, not just more efficient, cuts alone won’t do it. The Silicon Valley entrepreneurs Kushner has roped into helping him with the new office — such as Apple’s Tim Cook, Salesforce boss Marc Benioff and Tesla founder Elon Musk — would be the first to tell him that scale is important, and that growth is often a function of prioritizing R&D investments. You prototype cheaply to get to a minimum viable product, but if you stop there, you’re in trouble. You have to reinvest, constantly.
Lessons from Silicon Valley are even likelier to be misapplied in government than in media. Outside experts always groan that government institutions are running outdated systems that still rely on floppy disks, and that this is a function of some combination of government waste, idiocy and ubiquitous Luddite-ism. But a more logical explanation is that systems upgrades require appropriations, many of which have been gleefully slashed by Congress. There’s also the problem of government pay, and the fact that the private sector has financial resources that the government does not. Is it reasonable to expect speedy, high-quality upgrades when engineers are making $90,000 a year and implementations are often contracted out to the lowest bidder?
There's more, and it's not pretty...at the Washington Post.